THE MEDIA BUSINESS: Advertising; Y.&R. Seeks Acquisition Of Landor

By RANDALL ROTHENBERG

Published: September 6, 1989

YOUNG & RUBICAM is negotiating to acquire Landor Associates, a large independent international corporate identity consultant with headquarters in San Francisco.

Alex Kroll, the chairman of Y.&R., yesterday confirmed rumors that had attracted the notice of stock analysts as far away as London that the advertising agency is involved in discussions with Landor, one of last substantial corporate indentity firms. With revenues that its competitors say reach $30 million to $40 million annually, Landor may be the world's largest firm of its ilk.

''This is a blue-chip company in the identity and design field, and it would certainly add a dimension to what we can do for our clients,'' Mr. Kroll said. ''Design is part of the gestalt of communications.''

He stressed that the two companies have not yet agreed on a deal but said, ''We are hopeful.''

As the attention of consumers is drawn away from mainstream media like network television, large advertising companies have determined to help their clients, and diversify their sources of revenue, by offering more services in other areas of communications. So in recent years, corporate identity firms, which specialize in devising new names, logotypes and package designs and helping to integrate them into companies' communications programs, have found themselves the objects of interest by enormous ad agencies.

In 1985, for example, Saatchi & Saatchi acquired Siegel & Gale for a $2 million down payment, with further payments to be based on earnings. Last year, the WPP Group bought Anspach Grossman Portugal, another big corporate identity firm, for an amount that could reach $36 million.

Mr. Kroll refused to comment on the price Y.&R. might pay for Landor. But Mark Shepperd, an advertising analyst with Phillips & Drew, a London brokerage, said Y.&R. might pay $50 million for the company.

John M. Diefenbach, Landor's president, and Walter Landor, the founder and chairman, did not return calls made to their office.

Landor has been involved in several big corporate identity overhauls in recent years. It helped change Allegheny Airlines to USAir, and its redesign of British Airways' logotype and airplanes is considered a successful example of the craft of image transformation.

Last year, the company released a controversial survey that showed consumer disaffection with some of the most widely publicized corporate identity changes, like the American Can Corporation's transformation into the Primerica Corporation and the creation of the name Unisys from the merger of the Burroughs Corporation and the Sperry Corporation. Many of the names with which the Landor survey found fault were created by the company's competitors. The Unisys identity work, for example, was done by Anspach, and Primerica was the creation of Lippincott & Margulies.

Despite its success and reputation, , Landor has had financial difficulties recently and has been eager to find a buyer, executives in the corporate identity industry said.

WPP and Dentsu, the giant Japanese ad agency, are reported to have taken a cursory look at Landor.

An acquisition by Young & Rubicam or another large agency could benefit Landor, said Joel B. Portugal, a principal in Anspach.

''Since we have been affiliated with J. Walter Thompson and Ogilvy & Mather, there have been many instances where our skills and their skills have been put together to serve a client,'' he said.

But Clive Chajet, the chief executive of Lippincott, said ownership by an ad agency could actually harm an identity consultant.

''When a client hires us, they have a certain level of expectation for objective consulting advice,'' said Mr. Chajet, whose company is owned by the Marsh & McLennan Companies. ''It is difficult to maintain objectivity when one's mummy and daddy is an ad agency. Very often one can solve corporate communications problems through different techniques. One is advertising and another is identity, and the two may conflict.''